Journalize the entries to record the following selected bond

Journalize the entries to record the following selected bond investment transactions for Southwest Bank: Refer to the Chart of Accounts for exact wording of account titles.

Sold $250,000 of the bonds at 97, plus accrued interest of $1,875.

Income Summary

Journalize each of the entries to record the selected bond investment transactions for Southwest Bank. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

1

2

3

4

5

6

7

8

9

10

Apr. 1	Purchased $400,000 of Daytona Beach 4.5% bonds at 100 plus accrued interest of $4,500.
July 1	Received the first semiannual interest.
Sept. 1	Sold $250,000 of the bonds at 97, plus accrued interest of $1,875. CHART OF ACCOUNTS Southwest Bank General Ledger ASSETS 110 Cash 120 Accounts Receivable 121 Allowance for Doubtful Accounts 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 151 Supplies 152 Prepaid Insurance 161 Investments-Daytona Beach Bonds 165 Valuation Allowance for Trading Investments 166 Valuation Allowance for Available-for-Sale Investments 181 Land 191 Equipment 192 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 231 Interest Payable 241 Salaries Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Treasury Stock 332 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Unrealized Gain (Loss) on Available-for-Sale Investments 353 Stock Dividends 390 Income Summary Journalize each of the entries to record the selected bond investment transactions for Southwest Bank. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10 REVENUE 410 Sales 611 Interest Revenue 612 Dividend Revenue 631 Gain on Sale of Investments 641 Unrealized Gain on Trading Investments EXPENSES 511 Cost of Merchandise Sold 512 Bad Debt Expense 522 Salaries Expense 531 Advertising Expense 532 Rent Expense 533 Insurance Expense 534 Supplies Expense 561 Depreciation Expense-Equipment 590 Miscellaneous Expense 710 Interest Expense 731 Loss on Sale of Investments 741 Unrealized Loss on Trading

Solution

Date

Description

Post Ref.

Debit

Credit

1-Apr

Investments-Daytona Beach Bonds

161

$ 400,000.00

Interest Revenue

611

$      4,500.00

                Cash

110

$ 404,500.00

(bonds purchased and interest paid on bonds till date)

1-Jul

Cash

110

$      9,000.00

          Interest Revenue

611

$      9,000.00

(Interest on Bonds Receiced)

1-Sep

Cash

110

$ 244,375.00

Loss on Sale of Investments

731

$      7,500.00

                Investments-Daytona Beach Bonds

161

$ 250,000.00

                Interest Revenue

611

$      1,875.00

(Bonds sold and loss on sale recorded)

$ 665,375.00

$ 665,375.00

Date	Description	Post Ref.	Debit	Credit
1-Apr	Investments-Daytona Beach Bonds	161	$ 400,000.00
	Interest Revenue	611	$      4,500.00
	Cash	110		$ 404,500.00
	(bonds purchased and interest paid on bonds till date)
1-Jul	Cash	110	$      9,000.00
	Interest Revenue	611		$      9,000.00
	(Interest on Bonds Receiced)
1-Sep	Cash	110	$ 244,375.00
	Loss on Sale of Investments	731	$      7,500.00
	Investments-Daytona Beach Bonds	161		$ 250,000.00
	Interest Revenue	611		$      1,875.00
	(Bonds sold and loss on sale recorded)
			$ 665,375.00	$ 665,375.00